SUBJECT: intellectual property law

Project topic:
Registration and licensing of trademarks:
Limitation on transfer of goodwill.

Submitted By
ABHIJYOT SAHAY
Roll no. 1103
4 Year , 7 Semester, B.A.LL.B(Hons.)
th

Submitted to
Dr. shaiwal satyarthi
Faculty of intellectual property law

Chanakya national Law University, Patna

november, 2017
 CERTIFICATE

THIS IS TO CERTIFY THAT ABHIJYOT SAHAY, ROLL NO. 1103 , 4th

YEAR, SESSION 2014-2019 WAS DEPUTED TO MAKE THIS PROJECT
ON Registration and licensing of trademarks: Limitation on transfer of
goodwill .HE HAS DONE THIS WORK UNDER MY SUPERVISION AND
GUIDANCE. HIS WORK IS GOOD AS HE WORKED WITH FULL
DEVOTION.

SO, I HEREBY RECOMMENED THIS PROJECT TO BE ACCCEPTED

AND EVALUATED.

DATE:

Teachers name

Dr. SHAIWAL SATYARTHI

FACULTY OF

INTELLECTUAL PROPERTY LAW

C.N.L.U
 ACKNOWLEDGEMENT

Writing a project is one of the most significant academic challenges i have

ever faced. Though this project has been presented by us but there are many
people who remained in veil, who gave their all support and helped us to
complete this project.
First of all we are very grateful to our subject teacher
Dr. SHAIWAL SATYARTHI without the kind support of whom and help the
completion of the project was a herculean task for us. He donated his
valuable time from her busy time to help us to complete this project and
suggested us from where and how to collect data.
We are very thankful to the librarian who provided us several books on this
topic which proved beneficial in completing this project.
We acknowledge our friends who gave their valuable and meticulous advice
which was very useful and could not be ignored in writing the project.

ABHIJYOT SAHAY

3|Page
 TABLE OF CONTENT

AIMS AND OBJECTIVES

HYPOTHESIS
RESEARCH METHODOLOGY

CHAPTERISATION
PAGE

1) INTRODUCTION: REGISTRATION AND LICENSING OF

TRADEMARKS 06-09

2) PROCESS OF REGISTRATION AND LICENSING

OF TRADEMARKS. 10-16

3) FEW MORE IMPORTANT ASPECTS RELATED TO

TRADEMARK 17-20

4) TRANSFER OF GOODWILL AND TRADEMARK LAW. 21-28

5) CONCLUSION AND SUGGESTIONS 29-30

- BIBLIOGRAPHY 31

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Aims and Objectives

The objectives behind this project are:

a) To study the meaning of trademark its licensing and registration process
b) The significance of transfer of goodwill in trademark law.
c) The limitation on transfer of goodwill in trademark law.

Hypothesis
The Researcher hypothesis are:
a) Trademark is for the word, phrases or logo that identifies the source of goods and sevices.
b) To have Trademark rights the trademark holder must register it under THE TRADEMARK
ACT, 1999 in India based on VIENNA CONVENTION 1973.
c) The holder of trademark can transfer rights of it by licensing and assignments.
d) Now trademarks and transfer of goodwill are different things and trademark can be transferred
with or without goodwill.

Research Methodology
The researcher aims to research with Doctrinal Method by referring to books, journals, articles,
Bare acts, documentary, cases prevalent and the online sources as Research Paper.

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 CHAPTER- I
INTRODUCTION
MEANING, REGISTRATION AND LICENSING OF TRADEMARKS

What Trademarks Are

Trade mark is one of the Intellectual Property assets. Trade mark has enormous value for an
enterprise. These are the marks that are external to the goods to make the public identify a certain
quality and image associated with that product or service. It is an important means of promoting
goodwill with the clients and improving the bottom line. It is used as a product differentiator. It
speaks about the products origin and its design. It is a valuable marketing tool in todays
competitive markets. It has a legal protection to keep others away from using it. The trademarks
are associated with quality, security and even a sense of belonging in the minds of the consumers
for that product. Trade mark is a legally protected valuable marketing tool for the product
differentiation1.

The trademarks convey to us the important information of the source and the distinct
characteristics of the product. Therefore, trademarks are important marketing tools and the
foundation of the competition for the businesses. Presence of a lot of trade marks in market also
signifies the freedom of choice to the consumers.

Once a trade mark is registered, it can be renewed indefinitely, provided it is still being used in
business and commerce. However, the owner must prevent the public from misusing the brand
name to refer to all similar products. This is done by reminding the public through advertising that
their brand names are trademarks and not just words2.

Justification of Trademarks3.

i. Economic justification From the economic point of view, a trade mark is merely a symbol that
allows a purchaser to identify goods or service that have been satisfactory in the past and

1
Introduction to Intellectual Property-theory and practice(Kluwer Law International,1997)pg184

2
ibid
3
P.K. Vasudeva, World Trade Organization: Implications for Indian Economy(Pearson Education,2005)pg 169

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distinguish the goods or service that have failed to give satisfaction. Trade marks perform two
important market functions

(i) They encourage the production of quality products and

(ii) (ii) They reduce customers cost of shopping and making purchase decisions. Trade
marks play a crucial role in own free market economic system4.

ii. Quality Justification

An important purpose underlying trade mark law is the protection of the trademark owners
investment in the quality of the mark and the quality of the goods or service, which the mark
identifies. A certain amount of image differentiation also helps consumers select products of high
quality and reliability. It motivates producers to maintain adequate quality standards.

iii. Advertising Justification

A trade mark is species of advertising, its purpose being to fix the identity of the product and the
name of the producer in the minds of the people, who see the advertisement for marketing
decisions.

If the trade mark owner succeeds in creating a favourable image for the trade mark in the market
place, the mark itself can become a significant factor in stimulating sales. The ability of a mark to
generate goodwill through advertising has also gained recognition under the law of trade mark.

Trade mark license is an agreement between the registered proprietor of the trade mark (licenser)
and another person (licensee), authorizing the licensee to use the trade mark in course of trade,
against the certain payment of royalty to the licenser5.

- Their function. Trademarks are "brand names." They distinguish one company's cornflakes or

Four-wheel-drive station wagons from another's. Without them, how could you find products you
like or avoid ones you don't?

-Their form. Think of trademarks as more than words or logos. They may be three dimensional-
symbols, such as the well-known "golden arches." They even include colours, sounds and scents!

4
ibid
5
ibid

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- Types of marks. Technically, "trademark" means a symbol used with goods, rather than services.
Marks used with the last are called "service marks". For simplicity, "trademark" (or "mark") as
used here means any symbol that identifies only one firm or group of related firms.

- Guarantees of consumer value. Whatever their type, all marks have this in common: They allow
consumers to seek, or to avoid, particular sources of products or services.

Good trademarks do not wear out or expire. Well-chosen marks become more valuable as goodwill
grows6.

Trademarks are often the most important assets of established businesses. Imagine the loss if the
company that owns "Pepsi" had to give it up.

The word license is not mentioned in the Trade Marks Act, 1999. But the act speaks about the
registered user and permitted use. Section 48 to 53 of the Act contains the provisions relating
to registered user. Section 48 provides for any person other than the registered proprietor to be
registered as the registered user for the use of the mark in commerce.

Section 2 (1) (r) 7of the Act lays down the provision for two types of permitted use, one by the
registered user and the other by any person other than the registered user.

Section 498 of the Act regulates the registration as a registered user. The registered proprietor and
the proposed registered user should jointly apply for registration as registered user in a prescribed
form. The application should include

- The agreement between them, in writing or a duly authenticated copy of the agreement.

- An affidavit, made by the registered proprietor or a person authorized by him. The affidavit
should include particulars of the relationship between the registered proprietor and the proposed
registered user. It should also include the degree of control, exercised by the proprietor over the
permitted use and whether the proposed registered user would be the sole registered user9.

- Information about the concerned goods or services.

6
ibid
7
THE TRADEMARK ACT,1999
8
ibid
9
ibid

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- Conditions or restrictions, if any, regarding the characteristics of the goods or services and the
mode, place and period of permitted use10.

- Information about whether the permitted is for a limited period or without any such limit.

- The trade mark must remain registered for the time being.

- The use should be with consent of the registered proprietor and the consent should be given by a
written agreement.

- The use must be complied with any conditions or limitations to which it is subjected or the
registration of the mark is subjected.

The main difference between the registered user and unregistered permitted user is that the
registered user can institute proceedings of infringement in certain circumstances, whereas the
unregistered permitted user does not have such a right11.

Trade Mark licensing is profitable for both the licensor and the licensee. The licenser gets a steady
revenue source in the form of royalty and the license also acts as a defence against infringement
of the trademark, which has been licensed. The license confers the licensee with the goodwill and
recognition attached with the trademark and hence it is commercially beneficial for the licensee.

I. Unconventional Marks

Indias Trade Mark Registry has begun to recognize unconventional trademarks and has
extended trademark protection to a sound mark12. On August 18, 2008, Indias first sound mark
was granted to Sunnyvale, California-based Internet firm Yahoo Inc.s three-note Yahoo yodel by
the Delhi branch of the Trademark Registry. It was registered in classes 35, 38 and 42 for a series
of goods including email, advertising and business services and managing websites.

Under the TM Act, the term mark is defined to include a device, brand, heading, label, ticket,
name, signature, word, letter, numeral, shape of goods, packaging or, combination of colors, or

10
ibid
11
ibid
12
Capable of graphic representation and visually perceptibility are different concepts. A mark that is visually
perceptible is always capable of graphic representation. But not all marks capable of graphical representation are
visually perceptible. See Nuno Pires de Carvalho, The TRIPS Regime of Trademarks and Designs(Kluwer Law
International 2006) 234

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any combination thereof. Thus, the list of instances of marks is inclusive and not exhaustive. Any
mark capable of being graphically represented and indicative of a trade connection with the
proprietor is entitled to get registered as a trademark under the TM Act. This interpretation opens
the scope of trademark protection to unconventional trademarks like sound marks provided they
satisfy the graphical representation test and are not prohibited under Section 9 and 11 of the Act.
The only way the mark may be described in the application for trademark is by way of graphical
representation. However, the TM Act or the rules framed there under do not contemplate the form
of submission of records of the unconventional trademarks.

II. Scope of Graphical Representation

Trademark Rules define graphical representation as representation of a trademark for goods or

services in paper form. Therefore, sound marks can be represented on paper either in descriptive
form e.g. kukelekuuuuu (registered as Dutch sound mark - onomatopoeia which sounds like the
call of a cock) or as traditional musical notations e.g. D#, E etc 13. Other alternative methods for
their visual representation have also emerged like depictions by oscillogram; spectrum,
spectrogram and sonogram are now being accepted in other jurisdictions. However, such
representations must be handled carefully in order to meet the requirements of trademark offices
in India. In the case of Yahoos Yodel mark, they represented the mark using musical notations14.

13
ibid
14
ibid

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 CHAPTER II

PROCESS OF REGISTRATION AND LICENSING OF TRADEMARKS.

SYNCING THE INDIAN LAWS TO TIDE OVER THE HURDLES OF

REGISTRATION-

Reducing a sensory mark to a written description on paper may not be always possible. A
graphical description of a sound mark should clearly identify the exact sound, else the
enforcement of the same, would lead to practical issues. E.g. the search result of the trademark at
Trade Mark Registry would not be accurate if the mark is not appropriately described. Merely
musical notes without a listing of the note pattern would not provide enough sensory information
to contemplate the scope of protection on the mark. Musical notations alone are neither a clear
nor precise description of the sound mark and gives no information about the pitch and duration
of the sounds forming the melody. The graphical representations should be clear, precise, self-
contained, easily accessible, intelligible, durable and objective. A stave divided into bars and
showing, in particular, a clef, musical notes and rests whose form indicates the relative value
and, where appropriate, accidentals (sharp, flat, natural) - all of these determine the pitch and
duration of the sounds. This may constitute a faithful representation of the sequence of sounds
forming the melody in respect of which registration is sought15.

With regard to onomatopoeias, there is lack of consistency between the onomatopoeia itself, as
pronounced, and the actual sound or noise which it purports to imitate phonetically. Practical
difficulties are bound to arise when trademark searches will be required. For e.g. if the sound
mark is a crows call and is described as kukelekuuuuu, the same may be spelt differently or
represented with musical notations. The procedure may be highly complicated as musical
notations need to be matched against alphabets. To simplify matters, a sample of the sound may

15
The United States Trademark Association Trademark Review Commissions report to Congress had
recommended that the terms symbol or device should not be deleted or narrowed to preclude registration of
such things as colour ,shape ,smell or sound which function as a trademark. Their suggestion was followed by the
US Congress. See Jane C. Ginsburg et al , Trademarks and Brands-An Inter Disciplinary Critique(Cambridge
University Press 2008)93

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be submitted with the application. A separate database of these sound marks can be created and
rules for determination of deceptive similarity between sound marks should be developed16.

Indian Trade Mark Registry may have enhanced the scope of protection under the trademark
umbrella, but there need to be clear guidelines for description, recording and protection that will
help define the boundaries of protection of unconventional marks.

PROCESS OF REGISTRATION-

The application for trademark registration must contain a clear reproduction of the sign,
including any colors, forms, or three-dimensional features. These forms need to be filed with the
appropriate office of the Trade Marks Registry. The sign must fulfill certain conditions in order
to be protected as a trademark or as another type of mark and must indicate the class of goods
/ services to which it would apply. The TM Act has laid down absolute6 and relative grounds of
refusal17 of trademark registration. These grounds are akin to the provisions of the UK
Trademark Act of 1994.

The process of registration of trademarks under the TM Act can be explained

1. Mark should be distinctive and should not be in the prohibited category.

2. Carry out a search at the Trade Marks Registry, to find out if same or similar marks are either
registered or pending registration. This is advisable although not compulsory18.

3. Under the Trade Marks Act, a single application with respect to multiple classes can be filed.

4. The application is dated and numbered, and a copy is returned to the applicant / attorney. Once
the mark is registered, this number is deemed to be the Registration Number.

5. The Trade Marks Registry sends the Official Examination Report asking for clarifications, if
any, and also cites identical or deceptively similar marks already registered or pending
registration. The applicant has to overcome the objections. The application is thereafter

16
Capable of graphic representation and visually perceptibility are different concepts. A mark that is visually
perceptible is always capable of graphic representation. But not all marks capable of graphical representation are
visually perceptible. See Nuno Pires de Carvalho, The TRIPS Regime of Trademarks and Designs(Kluwer Law
International 2006) 234
17
15 U.S.C. Sec 1127.
18
ibid

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published in the Trade Marks Journal, which is a Government of India publication, published
by the Trade Marks Registry.

6. After publication, if the application is not opposed within the specified opposition period (four
months), then the registration is granted. On the other hand, if it is opposed by a third party, the
registration is granted only if the matter is decided in favor of the applicant.

7. After the objections are successfully met and answers are provided to the queries, the Trade
Marks Registry issues an official letter intimating their acceptance of the application.

8. Registration of a trademark normally takes four to five years. However, when the registration
certificate is issued, it is always effective from the date on which the application is filed19.

Can the Registration Process be Expedited?

After receipt of the official number of an application, the applicant may request an expedited
examination of a registration application, together with a declaration stating the reason for the
request and a payment of five times the application fee. If the Registrar of Trademarks is
satisfied with the reason, the examination of the application is expedited and the examination
report is issued within three months of the date of such request. If such a request is rejected after
the hearing, the fee paid is refunded20.

What is the Term of Registration?

The registration is valid for ten years and is renewable for a subsequent period of ten years. Non-
renewal leads to a lapse of registration. However, there is a procedure whereby a lapsed
registration can be restored.

HOW TO LICENSE A TRADEMARK IN INDIA-

Trade mark license is an agreement between the registered proprietor of the trade mark (licenser)
and another person (licensee), authorizing the licensee to use the trade mark in course of trade,
against the certain payment of royalty to the licenser.

19
ibid
20
In Oliveira v. Frito-Lay, Inc., 251 F.3d 56, 62 (2d Cir. 2001) the Federal Circuit asserted that there was no reason
why a musical composition could not serve as an indicator of source. Thus, it was recognized that musical
composition can act as a source identifier

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The word license is not mentioned in the Trade Marks Act, 1999. But the act speaks about the
registered user and permitted use. Section 48 to 5321 of the Act contains the provisions
relating to registered user. Section 48 provides for any person other than the registered
proprietor to be registered as the registered user for the use of the mark in commerce.

Section 2 (1) (r) of the Act22 lays down the provision for two types of permitted use, one by the
registered user and the other by any person other than the registered user. Section 49 of the Act
regulates the registration as a registered user. The registered proprietor and the proposed
registered user should jointly apply for registration as registered user in a prescribed form. The
application should include

The agreement between them, in writing or a duly authenticated copy of the agreement.

An affidavit, made by the registered proprietor or a person authorized by him. The affidavit
should include particulars of the relationship between the registered proprietor and the proposed
registered user. It should also include the degree of control, exercised by the proprietor over the
permitted use and whether the proposed registered user would be the sole registered user.

Information about the concerned goods or services.

Conditions or restrictions, if any, regarding the characteristics of the goods or services and the
mode, place and period of permitted use.

Information about whether the permitted is for a limited period or without any such limit. The
application for registration should be made within six months of the date of the agreement. The
Registrar is the final authority under the Act to grant the registration. The Registrar would
register the proposed registered user after being satisfied of the compliance of the requirements
of the registration. If there are other registered users, he shall issue notice in the prescribed
manner about the proposed registered user to them. The registration will be published in Indian
Trade Marks Journal within two months of registration.

21
the Trade Marks Act, 1999
22
ibid

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The registered user has the right to use the registered trade mark, subject to the conditions and
restrictions of the agreement on payment of certain royalty. He can institute infringement
proceedings under certain circumstances. But he cannot transmit and assign these rights.

Permitted use of a registered trade mark by a person other than the registered user is allowed
under certain conditions:

The trade mark must remain registered for the time being.

The use should be with consent of the registered proprietor and the consent should be given by
a written agreement.

The use must be complied with any conditions or limitations to which it is subjected or the
registration of the mark is subjected.

The main difference between the registered user and unregistered permitted user is that the
registered user can institute proceedings of infringement in certain circumstances, whereas the
unregistered permitted user does not have such a right.

Trade Mark licensing is profitable for both the licensor and the licensee. The licenser gets a
steady revenue source in the form of royalty and the license also acts as a defense against
infringement of the trademark, which has been licensed. The license confers the licensee with the
goodwill and recognition attached with the trademark and hence it is commercially beneficial for
the licensee.

GROUNDS FOR CANCELLATION/REVOCATION

The following are some of the grounds on which the registration of a trademark can be removed
or cancelled:

The trademark was registered without any bona fide intention on the part of the applicant to use
the trademark and there has been no bona fide use of the trademark for the time being up to a
date three months before the date of the application for removal23; or

That up to a date three months before the date of application for removal, a continuous
period of five years from the date on which the trademark is actually entered on the register or

23
See Ralf Sieckmann v. Deutsches Patent and Markenamt, Case C-273/00,12 Dec 2002,European Court of Justice

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longer has elapsed during which the trademark was registered and during which there was no
bona fide use thereof24; or

The trademark was registered without sufficient cause, or the trademark is wrongly
remaining on the Register25.

24
See Trademark Manual of Examination Procedure Sec. 1301.07(2001).
25
See In re General Electric Broadcasting Co., Inc., 199 U.S.P.Q. 560 (T.T.A.B. 1978).

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 CHAPTER III

FEW MORE IMPORTANT ASPECTS RELATED TO TRADEMARK

Assignment of Trademarks-

A registered trademark can be assigned or transmitted with or without the goodwill of the
business concerned, and in respect of either or all of the goods or services in respect of which the
trademark is registered. An unregistered trademark can be assigned or transmitted with or
without the goodwill of the business concerned. However, in respect of assignment of
trademarks (registered or unregistered) without goodwill of the business concerned, the
prescribed procedure has to be followed, which inter alia, includes advertisement of the proposed
assignment to be published in the newspapers. The Registrar of Trade Marks could impose
certain restrictions and conditions for the assignment or transmission of the trademark. To be
effective, the assignment or transmission must be recorded with the Registrar of Trade Marks.

Rights conferred by registration-

The registration of a trademark gives the registered proprietor the exclusive right to use the
trademark in relation to the goods or services for which it is registered and to obtain relief with
respect to infringement of the same. Registration acts as a public notice to others, informing
them that they should not use the trademarks which are registered or pending for registration.

Paris Convention-

Reciprocity for the purpose of claiming priority is allowed from the applications originating from
the Paris Convention countries if filed within 6 months from the date of priority.

INFRINGEMENT OF TRADEMARK-

Registration of a trademark is a prerequisite for initiating an infringement action. The following

essential conditions must exist for initiation of an infringement action26:

26
The concept of secondary meaning is based on the idea that marks that are descriptive of a product are
ordinarily not protectable as trademarks. However, some marks may be protected if they have acquired an
association or secondary meaning for the consuming public as an identifier of the source of goods. To establish
secondary meaning for a mark , a party must show that the primary significance of the mark in the minds of the
consuming public is not the product but the producer. See Daniel R. Schechter,5 Fordham Intell. Prop. Media &
Ent. L.J. 481. See also Zatarain's, Inc. v. Oak Grove Smokehouse, Inc., 698 F.2d 786, 791 (5th Cir.1983)

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 The allegedly infringing mark must be either identical or deceptively similar to the registered
trademark;

The goods / services in relation to which the allegedly infringing mark is used must be
specifically covered by the registration of the registered trademark27;

The use of the allegedly infringing mark must be in the course of trade; and

The use must be in such a manner as to render the use likely to be taken as being used as a
trademark.

A registered trademark is also infringed by use of a mark when because of:

Its identity with registered trademark and similarity with goods / services covered by
registration; or

Its similarity with registered trademark and identity with goods / services covered by
registration; or

Its identity with registered trademark and identity with goods / services covered by registration

Is likely to cause confusion on the part of the public (in case 3 above, confusion is presumed), or
which is likely to have an association with the registered trademark.

If an identical or similar mark is used with respect to goods or services which are not similar to
those for which a registered trademark is registered, such use amounts to infringement if a
registered trademark has reputation in India and the use of the mark without due cause takes
unfair advantage of or is detrimental to the distinctive character or repute of the registered
trademark.28

Under the TM Act, the following acts would also amount to an infringement of the RTM:

Use of the registered trademark as a trade name or part of the trade name dealing in same goods
or services for which the registered trademark is registered29; or

27
See Kawasaki Motors Corp. v. H-D Michigan, Inc., 43 U.S.P.Q.2d 1521 (T.T.A.B. 1997).
28
ibid
29
Kevin K. McCormick ,96 Trademark Rep. 1101 2006.

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 Use of the trademark in advertising if such advertising takes unfair advantage of and is contrary
to the honest practice in industrial or commercial matters, or is detrimental to its distinctive
character; or against the reputation of the trademark.

Under the TM Act, even oral use of the mark can constitute infringement.

Who can sue for Infringement?

The registered proprietor, his heirs and the registered user(s) can sue for infringement. An
assignee of a registered trademark can also sue for infringement. A passing off suit can be
converted into a combined action of infringement and passing off30, if the registration of the
trademark is obtained before the final hearing of the passing off suit.

Passing Off-

The user of an unregistered trademark is barred from instituting an infringement action.

However, if the mark in question has become well known in India, the user of such a trademark
is not without recourse and may seek a remedy by means of a passing off action. The purpose of
this tort is to protect commercial goodwill and to ensure that ones business reputation is not
exploited. Since business goodwill is an asset and therefore a species of property, the law
protects it against encroachment as such. In a passing off action, the plaintiff must establish that
the mark, name or get-up - the use of which by the defendant is subject of the action - is
distinctive of his goods in the eyes of the public or class of public and that his goods are
identified in the market by a particular mark or symbol.

Orders in Infringement and Passing off Suits-

In an action for infringement of a registered trademark, or in an action for passing off for either a
registered or unregistered mark, the court may order an injunction31. The court may also award
damages or an order for account of profits along with the delivery of the infringing marks, for

30
In re Clarke, 17 USPQ2d 1238 (TTAB 1990). The goods for which this scent was required was sewing thread and
yarn required for embroidery.
31
According to the functionality test, if the products feature is essential to the use or purpose of the article, then
thats feature is not a protectable trademark. This test ensures that the producers do not use trademark law to
protect product features that are vital to fair competition.

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destruction or erasure. In addition to the civil remedies, the TM Act contains stringent criminal
provisions relating to offenses and penalties32.

RECOGNITION OF FOREIGN WELL-KNOWN MARKS AND TRANS BORDER

REPUTATION-

The courts in India have recognized the trans-border reputation of foreign trademarks and trade
names and the importance of their protection.

The ruling of the Supreme Court of India in N. R. Dongre and Others v. Whirlpool Corporation
and Another33 was perhaps the first Indian case to recognize the concept of trans-border
reputation of trademarks. The subject matter of this case was the manufacture, sale of washing
machines by an Indian company using the trademark Whirlpool as part of the name by which it
had recently commenced marketing its washing machines. The appellant had also advertised the
washing machines as such. The claim of the respondent, the Whirlpool Corporation and its
Indian joint venture TVS-Whirlpool Limited was based on prior user of the mark Whirlpool
and the fact that the trademark had a trans-border reputation. They contended that any goods
marketed with the mark Whirlpool gave the impression of being goods manufactured by the
respondents. The washing machines manufactured, sold, and advertised by the appellant gave
that impression and this resulted in confusion arising in the market. The Whirlpool Corporation
sought a temporary injunction against the appellants use of the mark, which was granted by the
Delhi High Court and upheld by the Supreme Court of India. This judgment has been relied upon
successfully in a number of decisions passed by Indian courts down the years. International
trademarks, having no actual presence in India could, as a result, be enforced in India if a trans-
border reputation with respect to such trademarks can be shown to exist. Subsequently, marks
such as Volvo, Caterpillar, and Ocuflox, have received protection of their trademarks via judicial
decisions.34

32
ibid
33
www.manupatra.com
34
ibid

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 CHAPTER IV
TRANSFER OF GOODWILL AND TRADEMARK LAW.
- WHAT IS GOODWILL

Goodwill is also an intangible asset which cannot be easily defined. In the words of Lord
Macnaghten, in case of Commissioner of Inland Revenue v Muller & co's Margarine Ltd 35an be
described as "it is a thing very easy to describe, very difficult to define. It is the benefit and
advantage of the good name, reputation and connection of a business. It is the attractive force
which brings in customers. It is the one thing which distinguishes an old established business
from a new business at its first start. The goodwill of a business must emanate from a particular
centre or source. However widely extended or diffused its influence may be, goodwill is worth
nothing unless it has power of attraction sufficient to bring customers home to the source from
which it emanates36."

Goodwill of a trademark is local in character and divisible like in case of business of a brand
situated in different countries. In every country business holds a separate goodwill related to the
particular brand although some part of that goodwill is dependent upon the overall working of
the business around the world. Business of a brand may be closed in a particular country but
closing of that business would not affect the overall goodwill of the business. While the element
of goodwill may be based primarily on earnings, such factors as the prestige and renown of the
business, the ownership of a trade or brand name, and a record of successful operation over a
prolonged period in a particular locality, also may furnish support for the inclusion of intangible
value. This shows that goodwill is inclusive of brand value and based on number of other factors.
While trademark get its value from goodwill associated with products or services.37

Goodwill and Modern Trademark Policy

A mark is a symbol that consumers use to denote a single source of goods or services (which
together I shall refer to as products)38. For example, the mark CREST on a tube of toothpaste

35
www.manupatra.com

37
ibid
38
See generally Lisa B. Martin & Stacey M. Berg, Trademark Assignment: Avoiding a
Naked Transfer, 5 J. PROPRIETARY RTs. 8 (1994) (discussing several cases that consider the validity
of trademark assignments).

21 | P a g e
signifies that the particular tube comes from the same source as all the other toothpaste tubes
labelled CREST. This source-identifying property is valuable because it means consumers can
rely on the CREST mark to access information about CREST toothpaste.

Theoretically, any symbol can serve as a source-identifier depending on the meaning given it by
consumers39. Thus, phrases and sounds have been protected as marks.40So too have elements of a
products trade dress, including packaging and even readily discernible features of the product
itself such as the colour of wire fencing,41 the dcor of a restaurant,42 the design of furniture, and
even an artists unusual style. If consumers believe that all items bearing the symbol come from
the same source, the symbol has acquired source-identifying property of a trademark. The major
focus of trademark law is protecting the source identification and information transmission
function of marks. Doing this serves three important policy goals. First, and most important, it
helps to reduce consumer search costs. By enforcing exclusivity, trademark law assures that
consumers can rely on marks to retrieve information about a product that they have acquired
through experience, advertising, or word of mouth. The information might be factual such as
information that CREST toothpaste reduces cavities or it might be emotional or affective in
content. Advertising often relies on communicating positive images and emotional associations
with the product being advertised.43 Indeed, the consumers emotional response sometimes
becomes an important component of the product itself. For example, perfume advertising relies
heavily on images and music to evoke feelings that the consumer is supposed to experience

39
MCCARTHY, supra note 2, 18:3."The central purpose of the technical rules regarding
the assignment of trademarks is to protect consumers ....
40
ibid
41
See William M. Landes & Richard A. Posner, Trademark Law: An Economic Perspective,
30 J.L. & ECON. 265,265-66 (1987). Trademarks have been protected, historically, because they
provide information about the products to which they are affixed, guarantee a predictable quality,
and reduce consumer costs of collecting information when they decide to make a purchase. Id.
("[T]rademark law... can best be explained on the hypothesis that the law is trying to promote
economic efficiency."); see also Nicholas Economides, The Economics of Trademarks, 78
TRADEMARK REP. 523, 523 (1988); William P. Kratzke, Normative Economic Analysis of
Trademark Law, 21 MEM. ST. U. L. REV. 199, 213 (1991).
42
2 MCCARTHY, supra note 2, 18:2. See generally 4 J. THOMAS McCARTHY, McCARTHY
ON TRADEMARKS AND UNFAIR COMPETITION 24-25 (4th ed. 2005) (discussing different types
of infringing uses and the infringing use of trademarks in noncompetitive goods and services). For
a discussion on the monopolistic effect of trademarks, see GEORGE J. ALEXANDER, HONESTY AND
COMPETITION 26-27 (1967); EDWARD HASTINGS CHAMBERLIN, THE THEORY OF MONOPOLISTIC
COMPETITION 57-64 (8th ed. 1969); A.G. Papandreou, The Economic Effect of Trademarks, 44
CAL. L. REv. 503, 505 (1956).
43
ibid

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while wearing the perfume, and those feelings end up being a large part of what the consumer
seeks when she buys a particular brand of perfume44. All of this factual and emotional
information about a brand is what the mark communicates.

TRADEMARK & GOODWILL: SEPARABLE OR INSEPARABLE

In case of assignment with goodwill, assigner transfer absolute rights i.e. all the rights and values
associated with trademark which give absolute authority to transferee to control, to sell or to
improvise or change the quality or structure or completely stop the services of such products. It
is basically that transferor is replaced by transferee in terms of authority, control & rights & after
assignment transferor is completely barred from using such trademark associated with any
products & services in kind. Whereas trademark assigned without goodwill means the right to
use trademark associated with the specific products or services of transferor is transferred to the
transferee & rest of the goodwill lies with transferor. Accordingly, transferee can use such
trademark for specific products & services as per agreement unless and until it is likely to
deceive or create confusion it does not create multiple rights in the same goods or services or if
they are associated with each other.

In Associated Electronics & Electrical Pvt. Ltd.v. DCIT45 , Income Tax Appellate Tribunal held
that trademark and goodwill are two different concepts and transfer of trademark does not mean
transfer of goodwill. Therefore, both Goodwill and trademark are different assets.

Similarly in Kwality Biscuit v. Assistant CIT, Bangalore46 Income Tax Appellate Tribunal court
held that right to manufacture biscuits was independent, separate and distinct right from right to
market, distribute and sell biscuits under the brand name 'kwality', That means right to
manufacture is still with assignor and will continue in the same business but under different
brand name. Trademark and goodwill is separable.

44
See Lemley, supra note 10, at 1697-99 (noting that courts have increasingly shown their
willingness to spread new legal rules, such as dilution laws, beyond their natural scope, and are
repeatedly treating trademarks "as things owned in their own right, rather than as advertising
connected with a particular product").
26. See Rochelle Cooper Dreyfuss,
45
www.manupatra.com
46
ibid

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Assignment of Trademarks in India

Just as in the case of physical property such as land, every owner of a Brand or Trademark has
the right to sell, license, transfer, etc. its respective brand or trademark in accordance with legal
procedures. A brand or Trademark owner can transfer his rights with respect to his trademark
either by way of assignment or by licensing. In India, The Trade Marks Act, 1999 deals with
assignment as well licensing of trademarks47.

To put it simply, in case of an assignment of a trademark, there is a change in the ownership of

the registered brand and in case of licensing, the right in the trade mark continues to vest with the
original owner but only few restricted rights to use the brand/mark are given to the third party.

Assignment of a trademark occurs when the ownership of such mark as such, is transferred from
one party to another whether along with or without the goodwill of the business. In case of a
registered Trademark, such assignment is required to be recorded in the Register of trademarks.

A mark may be assigned or transferred to another entity in any of the following manners:

Complete Assignment to another entity- The owner transfers all its rights with respect to a mark
to another entity, including the transfer of the rights such as right to further transfer, to earn
royalties, etc. (E.g. X, the proprietor of a brand, sells his mark completely through an agreement
to Y. After this X does not retain any rights with respect to the brand.)

Assignment to another entity but with respect to only some of the goods/services- The transfer of
ownership is restricted to specific products or services only. (E.g. P, the proprietor of a brand
used for jams and jellies and dairy products. P assigns the rights in the brand with respect to only
dairy products to Q and retains the rights in the brand with respect to jams and jellies.) This is
called partial assignment48.

Assignment with goodwill- Such assignment is where the rights and value of a trademark as
associated with the product is also transferred to another entity.(E.g. P, the proprietor of a brand
"Shudh" relating to dairy products, sells his brand to Q such that Q will be able to use the brand
"Shudh" with respect to dairy products as well as any other products it manufactures.)

47
The Trade Marks Act, 1999
48
ibid

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Assignment without goodwill- Such assignment also referred to as gross assignment, is where
the owner of the brand restricts the right of the buyer and does not allow him to use such brand
for the products being used by the original owner. Thus, the goodwill attached to such brand with
respect to the product already being sold under such brand, is not transferred to the buyer. (E.g.
P, the proprietor of a brand "Shudh" relating to dairy products, sells his brand to Q such that Q
will not be able to use the mark "Shudh" with respect to dairy products but can use this brand for
any other products being manufactured by it. In such case the goodwill which is associated with
brand "Shudh" for dairy products is not transferred to Q and Q will be required to create distinct
goodwill of brand "Shudh" for any other product or service like Restaurant wherein Q proposes
to use this brand.). In many jurisdictions like United States, assignment of mark without
goodwill is not allowed at all. India on the other hand allows assignment without goodwill.

Further, in case of registered Trademarks, the Trade Mark Act 1999 also puts certain restrictions
on the assignment of a registered trade mark wherein there exist possibilities of creating
confusion in the mind of public/users. Such restrictions are:

Restriction on assignment that results in the creation of exclusive rights in more than one person
with respect to the same goods or services, or for same description of goods or services or such
goods or services as associated with each other49.

Restriction on assignment that results in different people using the trademark in different parts of
the country simultaneously.

Agreements for Transmission

A trade mark is generally assigned by way of a properly executed Trademark Assignment

Agreement which pertains to the transfer of the mark from one person or entity who is the owner
to another. It is to be ensured when drafting such agreement that:

- The rights of the owner of the brand are not detrimentally affected due to the obligations
contained50.

49
ibid
50
ibid

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- The requirement and decision regarding whether the assignment should be with or without the
goodwill of the business is explicitly mentioned and negotiated

- The agreement should be drafted keeping in mind the purpose of the transaction in question

Fee for assignment or transfer of single trademark:

-If made within six months from the date of acquisition of proprietorship: Statutory fee is INR.
5,000

-If made after the expiration of six months but before 12 months from the date of acquisition of
proprietorship: Statutory fee is INR. 7,500

-If made after 12 months from the date of acquisition of proprietorship: Statutory fee is INR.
10,000

Procedure to record the assignment of trademark with the Registry:

Assignment of an unregistered mark:

Section 39 stipulates that an unregistered trademark may be assigned or transmitted with or

without the goodwill of the business concerned. A request has to be made on Form TM-16 for an
unregistered trademark to be assigned or transferred.

Assignment of a registered trademark:

Section 38 stipulates that trademarks can be either assigned in full or transmitted in part, with or
without the goodwill of the business. All transmissions or assignments must be registered with
the Registrar of Trade Marks on Form 23 or 24 of the Trade Marks.

PROBLEMS WITH THE GOODWILL-AS-PROPERTY THEORY

The goodwill-as-property theory had problems, and these problems became increasingly
troubling to jurists over the first half of the twentieth century. One problem had to do with the
poor fit between an amorphous goodwill concept and the demands of a property theory that
presupposed a relatively clear definition of the thing qualifying as property. Another had to do
with the rise of legal realism and its attack on late nineteenth century formalism, especially its
formalistic property rules. And a third problem had to do with growing concerns about the risk of
monopoly.
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A. Difficulties Defining Goodwill

As we have already seen, no one was able to find a satisfactory definition of goodwill because no
one had a clear idea of what goodwill actually was51 some judges and commentators defined
goodwill probabilistically, as the tendency or likelihood that a consumer would return to the
same product or firm and make repeat purchases52. But most jurists had trouble with this
definition53.It described the effects of goodwill, but not goodwill itself. At a deeper level, it
lacked normative content. That consumers returned to the same product was profitable for the
firm selling the product, but it provided no reason in itself to give the firm a right to the profit
flow or to impose duties on competitors not to interfere.

B. The Legal Realist Attack

The attack on nineteenth century formalism gained momentum during the opening decades of the
twentieth century, first with sociological jurisprudence in the 1910s and 1920s and then with
legal realism in the 1930s.54 Critics challenged the prevailing natural law theory of property
rights and the conceptualistic mode of legal reasoning that supported it, and their challenge had
specific implications for trademark law. Simply put, the critics attacked the formalist premise
that labelling something as property in and of itself entailed certain legal rights as a purely
logical matter.55 According to these critics, the only sensible approach was positivist and
functional. Rather than deduce legal rights from abstract natural law concepts like property,
judges should (and in fact did surreptitiously) make legal rights by choosing rules that best serve
the relevant policy goals.56 Applied to trademark law, this meant that a trademark owners rights
had nothing whatsoever to do with whether the firms goodwill was or was not property; those
rights had to do instead with what best served trademark policies.

51
See Vandevelde, supra note 156, at 338.
52
ibid
53
ibid
54
See Economides, supra note 15, at 531. "Even though the consumer is an infrequent
buyer of a particular kind of electronic product, he may be a frequent buyer of the overall category
of electronic products, and thus he is likely to have previous experience in the consumption of
goods with the same trade name."
55
Cf discussion infra Part IV.B.
56
ibid

27 | P a g e
Another approach, which was more popular with economists than lawyers, defined goodwill in
terms of favourable mental states. on this view, goodwill was the public esteem or favourable57
reputation that a firm enjoyed, or simply those habits or customs that created buying inertia.these
psychological definitions at least had the virtue of focusing on causes rather than effects. But
they suffered from the same problems as the probabilistic definition. They located goodwill
outside the firm without identifying anything that could be the object of property rights, and they
failed to explain why the law should provide protection58.

57
JAY M. SMITH. ET AL., INTERMEDIATE ACCOUNTING: COMPREHENSIVE VOLUME 437 (12th
ed. 1995).
58
ibid

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 CHAPTER VI
CONCLUSION AND SUGGESTIONS.
The importance of IPR and their protection is acknowledged the world over as essential to
business. In tune with the world scenario, India too has recognized the value of IP, which
recognition has been consistently upheld by legislators, courts and the industry. India is now a
signatory to various IP treaties and conventions. This has helped India become more attuned to
the worlds approaches and attitudes towards IP protection. India has already taken steps to
comply with its obligations under TRIPS, and the Indian IP law regime is almost at par with the
regimes of many developed nations. Historically, the enforcement of IPRs in India was not
particularly effective. However, recent judicial rulings and steps taken by various enforcement
agencies demonstrate that India is gearing up for effective protection and enforcement of IPRs.
The Indian police has established special IP cells where specially trained police officers have
been appointed to monitor IP infringement and cyber crimes. Various Indian industries have also
become more proactive in protecting their IPRs. For example, the Indian Music Industry, an
association of music companies, which headed by a retired senior police official, has taken
similar proactive steps to combat music piracy. All in all, India has taken many positive steps
toward improving its IPR regime and is expected to do much more in the coming years to
streamline itself with the best practices in the field of intellectual property rights.

The TRIPs Agreement does not make capability of graphical representation as a necessary
condition for the trademark. Similarly, the Trademark Regime of the United States does not
require graphical representation of the trademark as a necessary condition for the registration of a
trademark. That is why the criteria for the registration of non-conventional trademarks are much
more liberal in the United States in comparison to countries where graphically representability is
a necessary condition for a trademark. The Indian Trademark Regime has, so far, imitated the
position of European Union as far as requirement of graphical representation for a trademark is
concerned. The Indian Trademark Act, 1999 puts obligation of capability of graphical
representation for the registration of trademark. Thus, it makes registration of non-conventional
trademarks much more stringent in India than in the United States. The non-conventional
trademarks possess capability of source identifier despite not easily graphically representable.
The working of US Trademark Regime proves this fact. Thus, we can conclusively hold that the

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Indian Trademark Act 1999 has put an unnecessary burden of capability of graphical
representation as a condition for the registration of a trademark. In the increasingly globalized
world, the use of sound, scent, colour, motion or holograms as a trademark is bound to increase
in the nearby future. Thus, we should liberalize our trademark regime by diluting the requirement
of graphical representation for the non-conventional trademarks.

While wrapping up, it can be stated that the transfer of proprietary rights in trademark is similar
to any other asset, the difference, however, comes in reference to the goodwill attached to it. It is
the goodwill which creates the value of a trademark and in the contemporary period same is also
a separable part of trademark. Goodwill provides bargaining power in the hand of the seller and
therefore same is been recognized under the law in reference to the transfer of rights in a
trademark. A trademark which is transferred with goodwill will get much higher value in
comparison to the trademark which is transferred without goodwill.

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 BIBLIOGRAPHY
Books referred
1. Demystifying Intellectual Property Rights, Author: NR Subbaram, ISBN: 9788180385780,
Year: 2009,Format: Hard Cover, Edition: First.
2. Intellectual Property And Taxation, Author: Sudhir Raja Ravindran, ISBN:
9788180381461,Year: 2007, Format: Hard Cover, Edition: First.
3. Geographical Indications: A Search For Identity, Author: Latha R Nair & Rajendra Kumar
4. INTELLECTUAL PROPERTY RIGHT IN INDIA , Author: V K AHUJA,ISBN:
9789351433880,Year: 2015, Format: Hard Cover,Edition,:2nd Edition.
5. Intellectual Property Rights in India, Author: VK Ahuja , ISBN: 9788180385193, Year:
2009, Format: Hard Cover, Edition: 1 (Set of 2 Vols.)
6. Bently & Davis, Trade Mark and Brands (Ginsburg Cambridge University Press 2008)
7. Shilling D., Essentials of Trademarks and Unfair Competition (John Wiley & Sons 2002)
Websites reffered-
1. www.manupatra.com
2. www.legalserviceindia.com
3. nopr.niscair.res.in
4. www.ipindia.nic.in
Statutes referred -
- Lanham (Trademark) Act (US)
- Trade marks Act, 1999 (India)
Articles referred -
- Arka Majumdar, The Requirement of Graphical Representibility for Non-Conventional
Trademarks, nopr.niscair.res.in ... JIPR Vol.11(5) [September 2014]
- Dev Gangiee, Non-Conventional Trademarks in India, www.manupatra.co.in/.../BB1047DA-
5CCF-41BC-9C82-487F5DC57.
- Intellectual Property Law in India,July 2015 Legal, Regulatory & Tax, Nishith Desai Associates
(NDA),
- Shield Mark BV v. Joost Kist h.o.d.n. Memex, (1999).
- HUNTING GOODWILL: A HISTORY OF THE CONCEPT OF GOODWILL IN
TRADEMARK LAW, ROBERT G. BONE.

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